The Dems and Trade

By November 13, 2006Trade

A few interesting articles over the past few days, emphasizing our concerns that free trade might be threatened in the new Congress. Late last week we concluded an agreement with Russia on market access, an agreement necessary if Russia is to join the rest of the world trading system in the World Trade Organization (WTO). This was another shot in the arm for American manufacturers, who are always on the hunt for more customers.

Over the weekend, however, there was an op-ed by lefty — uh, sorry, “progressive” — columnist Harold Meyerson, essentially cheering the demise of free trade members of congress and welcoming those more skeptical to trade agreements. Remember that these agreements open markets to US manufacturers, so it’s in our interest to see more of them, but the Dobbsians have it exactly backwards, thinking these agreements cause the trade deficit. They’re wrong.

In Saturday’s Wall Street Journal there was a front page story by Greg Hitt entitled, “Democratic Gains Raise Roadblocks to Free Trade-Push.” This in a nutshell is our concern. As we’ve noted many times here before, Bill Clinton was a centrist in a few key ways and trade was certainly one of them. His ascendancy also spurred the ascendancy of groups like the Democratic Leadership Council (DLC), a group of centrists committed to, among other principles, free trade. Some 100 Democrats supported Clinton’s push for NAFTA, but their number has dwindled — to 15 for CAFTA earlier this year. Yet both agreements have opened markets to US-made goods. “The U.S. in the past 20 years.” says Hitt, “has championed global and regional trade deals that have significantly lowered tariffs and have helped spur a boom in global trade.” He has it exactly right, but the rhetoric these days has obscured this fact.

There is hope, however. Many of the newly-elected Democrats lean more to the center, or even the right, and it looks like the centrist Blue Dogs and New Dems will pick up many new members. These have been the groups that have pushed the trade deals in the past. If Pelosi & Co. want to hang on to the House for longer than two years and continue the phenomenal prosperity we’ve seen as a nation, we will need more — not fewer — free-trade Democrats.

UPDATE: (Carter Wood) The Washington Post covered the trade topic Tuesday, as well. Straightforward story here.

UPDATE 2: (Carter Wood) Jay Ambrose in The Examiner today offers a harsh assessment of the Democrats for anti-trade leanings. But he’s not too happy with the Administration, either.

Join the discussion 2 Comments

  • John Konop says:

    How Bad Trade Deals are Destroying the Middle Class

    This is from “Skeptical Economist”.

    So far, our global economic failures show up mainly as discontented workers in areas hard hit by import competition. However, the real problems (and the worker problems are quite real) are considerably worse

    The United States as a nation is far from self-sufficient or anything close. Back in Kennedy era, imports and exports were in the range of 4 to 5% of GDP. The US economy was closes to autarkic. These days comparable numbers are imports are 16.22% of GDP and exports are 10.46% of GDP. Per se, there is nothing wrong with trade growing as a percent of GDP. However, the brutal reality is that our nation can no longer pay its bills. Imports of goods are almost double exports of goods. We enjoy a small (and shrinking) surplus on services and are now in deficit for payments (profits received from overseas US investments versus profit earned by foreign investment in the US).

    If you could only pay half of your bills, would you think you were doing well? Would that be OK? Might some question of economic failure arise? Wouldn’t virtually every American see it that way? Yet, when it comes to our country, it is somehow OK. Of course, it is not.

    If you could only pay half of your bills, your debts would be soaring. Guess what? So are the debts of the United States. Of course, the national debt is growing and more than 50% owned by foreigners. However, the debts of ordinary Americans are rising as well and a growing percentage are owned by foreigners as well.

    The trade debate is usually depicted in terms of “cramped, narrow minded, locally oriented protectionists” versus “visionary, open minded, free trading globalists”. This caricature is largely correct. However, that doesn’t mean the protectionists are wrong. With America going broke, they are at least on the right side of the issue..

    Thomas Friedman demonstrated again the cluelessness of our elites on trade today. His piece “China: Scapegoat or Sputnik” repeated the usual mantra about education solving our problems. His actual words were “health care, portability of pensions, entitlements, and lifelong learning”. Nice ideas, but will they really help middle aged workers without jobs? No, of course not, but the deeper problem is they won’t fix our trade problems either. We will simply go broke faster. What words were missing? How about “overvalued currency”, “RMB versus the dollar”, “China’s lack of currency flexibility”, etc. All notably missing.

  • Gem Hudson says:

    When you have an importing business of exporting all of your jobs and an export business of importing nothing but all of their dumped goods, we are to spend more on what we are not making all that much of the money anymore and it all cost the Chinese in what they are not getting pay all that much either. Who is really making the money in this deal?